Sri Lanka says pressing ahead with shipping liberalization, amid Indian moves

ECONOMYNEXT – Sri Lanka will press ahead with liberalizing the island’s shipping industry Finance Minister Mangala Samaraweera said, a move first announced last year but was opposed by a domestic shipping agency cartel, while India is also freeing the sector to make it more competitive.

“We are going ahead with the liberalisation of the shippingindustry before the next budget,” Minister Samaraweera said at the 179th annual general meeting of the Ceylon Chamber of Commerce.

Samaraweera, , said that it is the responsibility of the government to enhance competition and provide goods at lower prices to the public through liberalisation of the economy.

Samaraweera is a member of the United National Party, which is one of the two main parties in Sri Lanka’s coalition administration.

Although the proposal to liberalise foreign ownership of shipping and freight forwarding agencies was in the 2018 budget, Shipping Minister Mahinda Samarasinghe opposed the move.

Samarasinghe had said that liberalization of the shipping industry was against the policies of President Maithripala Sirisena and his Sri Lanka Freedom Party.

Meanwhile India is going ahead with liberalization of its own shipping sector.

In May, India’s Modhi admininistration announced that it will allow foreign shipping lines to carry containers between domestic ports, a move that will make it cheaper to consolidate containers in major ports for transhipment to mainline ships.

The so-calld ‘cabotage’ restrictions, which gave preference to domestic Indian feeder lines, has in part contribted to making Sri Lanka’s Colombo a major transhimpent hub for Indian cargo along with Jebel Ali in Dubai and Singapore, according to Indian interests which pushed to liberalize.

Sri Lanka also halted in mid-way an attempt to attract a major shipping line to the so-called ‘East Terminal’ in Colombo port, though MSC, the world largest shipping line, CMA-CGM and Mearsk were among the bidders (Maersk, MSC, CMA-CGM, bid for Sri Lanka terminal).





Whether the failure to get a global shipping line into Colombo, was due to coalition politics or special interest wrangling is not known.

Both MSC and CMA-CGM had had recently set up joint-venture terminals with India’s Adani Ports group at Mundra port. Adani group is said to be a prime mover in India’s shipping liberalization drive.

In Sri Lanka, The Ceylon Association of Shipping Agents and the Sri Lanka Logistics and Freight Forwarders Association had lobbied against liberalization, which Minister Samaraweera said will make Sri Lanka a key shipping hub like Singapore.

At the moment the shipping agency business is dominated by a few companies.

Vasudeva Nanayakkara, an opposition member, had petitioned the Court of Appeal, saying that key bureaucrats and politicians were not performing adequately to stop cartelization of the industry, which has been under the Shipping Act No. 52 of 1971, and 70 percent of the industry was now controlled by two companies. (Colombo/June29/2018)

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